The fire of falling real sector in China reaches banking, there may be chaos, the country is frightened by the sound of economic recession.
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Amidst India’s progress in the global economy, China’s position is becoming tenuous. The real estate crisis here (Real Estate Crisis)’s impact is beginning to be seen on the banking sector. China’s largest wealth management company (Wealth Management Company) has clearly said that he does not have money to pay the bill. The company has outstanding of $64 billion. But now the company is declaring itself bankrupt. With this announcement of the company, a new crisis has started appearing in China. According to Reuters report, Zhongzhi Enterprise Group(ZEG) It is China’s largest fund management company. He has a liability of 420 yuan i.e. 64 billion dollars. Whereas, the company has total assets of 200 yuan. In this regard, the company has said that its money is stuck in debt and equity for a long time. Whereas, liquidity within the company has also ended. His condition has completely deteriorated.
Pressure was already visible on the company
The impact of the financial crisis on the company started becoming visible from the month of August. The company hired one of the Big Four accounting firms for the audit. After this the company started looking for strategic investors. Meanwhile, Trust defaulted in payments to corporate investors. The company manages funds of about $87 billion. It also gives the highest returns to investors in the country. Zhongzhi Enterprise Group (ZEG) is involved in shadow banking. If this company goes bankrupt, there will be a big problem in China’s shadow banking sector. Most of the middle and upper-middle class people have invested in it. In such a situation, if the confidence of other investors in the country is lost then people will start withdrawing money in large numbers from investments. Due to this the condition of the country is likely to worsen. Some analysts expect regulators to take action to prevent wider consequences. The real estate sector in China has been in deep crisis for some time now. The contribution of real estate in the total economy of the country is more than 25 percent. In such a situation, many experts believe that the economic recession in China may start from here.
Tesla will also shock China
Apple and Tesla have a big contribution in China’s economy. Due to US-China relations and Covid policy, Apple turned to India. Now, Tesla is also looking for manufacturing opportunities in India. Its impact is directly on China’s economy. Apple has started its manufacturing in India. The Indian government is making full preparations to bring Tesla to India. According to the ET report, the PMO has ordered the government departments to complete the work of giving all the necessary approvals by January. In June this year, Indian Prime Minister Narendra Modi visited America. During this time he met Tesla CEO Elon Musk. Since then, the Commerce and Industry, Heavy Industry and Electronics and IT ministries are in talks with electric car makers between Tesla and India. It is considered very important for both India and Tesla to get this deal done by January. On one hand, this deal will make India’s economy grow very fast. At the same time, American President Joe Biden will be the chief guest on the occasion of Republic Day in January. In such a situation, India is trying its best to close this deal by January.
India played a big innings
India, the US and 12 other members of the IPEF group have signed an agreement to bring flexibility in the supply chain. This will help mitigate the risks of economic disruptions caused by possible relocation of production centers to critical areas and supply chain shocks. The agreement was signed in San Francisco. Commerce and Industry Minister Piyush Goyal is currently in San Francisco to attend the ministerial meeting of the Indo-Pacific Economic Framework for Prosperity (IPEF). This agreement will help member countries like India to reduce their dependence on China. The outbreak of the COVID-19 pandemic severely disrupted the global supply chain, as most countries depend on China for various products such as pharmaceutical raw materials.
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